Business ‘champs’ issue warning on looming ‘Abenomics’ hangover

DALIAN, CHINA – Experts and business leaders who gathered Thursday at an international meeting in Dalian urged the government led by Prime Minister Shinzo Abe to be on guard against negative factors that could hurt Japan’s economy.

In a session on Japan at the Annual Meeting of the New Champions 2013, also known as the Summer Davos, participants welcomed the results so far from “Abenomics,” which has begun to reverse the deflationary tide and driven up stock prices.

But they also raised concerns going forward.

“In Japan, we should not forget that the economy is temporarily being boosted due to bold monetary easing and correction of the strong yen,” said Yorihiko Kojima, chairman of Mitsubishi Corp. and one of the panelists in the session titled “Abenomics: An early assessment.”

“The government has not addressed real structural reforms,” he said, adding that it must implement measures to increase corporate investment, such as corporate tax cuts.

Kent Calder, director of the Edwin O. Reischauer Center for East Asian Studies at Johns Hopkins University, agreed that the early track record for Abenomics is remarkable, but said the real question is about its future.

Former economy minister Heizo Takenaka, meanwhile, said holding the 2020 Olympics and Paralympics in Tokyo will provide a strong tailwind for the economy. He even coined a new term: “Abenolympics.”

But he also said that fiscal consolidation and deregulation still haven’t been addressed.

“The (planned) consumption tax hike is not going to solve the fiscal deficit problem fundamentally and it is not going to improve the quality of social welfare,” Takenaka said.

Panel member Yasutoshi Nishimura, senior vice minister of the Cabinet Office, boasted that Japan now has a stable government after the Upper House election in July, and that taking advantage of this stability, it will launch structural reforms and talks on corporate tax cuts.

The three-day annual conference that kicked off Wednesday is organized by the World Economic Forum. It brings together leading figures of global businesses, governments, media, academia and other sectors.